NAB’s new coal mining risk appetite statement goes further than any other major Australian bank by ruling out lending to new thermal coal mines or extensions, according to environmental finance advocates Market Forces.

“NAB has lifted the bar above its competitors by becoming the first major bank to end lending to all new thermal coal mining,” said Market Forces Executive Director Julien Vincent. “This policy means NAB joins the ranks of dozens of banks and insurance companies globally that are withdrawing from this most climate-polluting of industries.”

Last month, APRA Executive Board member Geoff Summerhayes gave a speech, warning the transition to a low carbon economy is already underway and “institutions that fail to adequately plan for this transition put their own futures in jeopardy, with subsequent consequences for their account holders, members or policyholders.”

“This is a welcome new policy, because with regulators signalling they will act if banks don’t, moves like NAB’s to get its loan book in order are just plain common sense,” said Vincent. “As the economy decarbonises, it is widely understood that thermal coal will be the first fossil fuel to go.”

However, the policy was soured by the remarks of NAB’s head of institutional banking and former NSW Premier Mike Baird, who promoted coal power as the bank still has no policy to restrict lending to polluting power stations. NAB is set to undertake a review of its risk appetite to power utilities and the oil & gas sectors in 2018. Market Forces believes that if the bank is to remain true to its commitment to help hold global warming to less than 2ºC, it needs to signal an exit from these sectors as well, while ramping up support for renewable energy.

“To stop funding new coal mines while keeping open the prospect of supporting coal power stations is like saying you won’t finance ammunition but have no problem with guns.

“Former Premier Baird’s taking up coal power will likely send a few faces into palms within the bank, especially after AGL has just this week demonstrated how it is cheaper to close their Liddell power station and replace it with renewable energy.

“If NAB really wants to be taken seriously on its climate change risk management, it needs to ensure that policy and action drive greenhouse gas pollution out of the economy across the board.

Other major banks have taken the following measures regarding lending to coal:

ANZ has a policy that limits lending to new coal power stations only if they produce less than 800 kg of CO2 per Megawatt hour. After the bank’s 2016 annual general meeting, CEO Shayne Elliott said indicated the bank’s loan book exposure to coal was trending down.

Commonwealth Bank signalled in its November annual general meeting its lending to coal was shrinking and expects it would continue to decline over time.

Westpac’s climate change policy released in April 2017 excludes lending to new thermal coal basins and mines with an energy content less than the “Newcastle high energy coal benchmark”, and sets a target of reducing the emissions intensity of its power generation portfolio to 300 kg CO2/MWh by 2020, effectively prohibiting new exposures to coal power from its loan book.